Question

Ortega Company manufactures computer hard drives. The market for hard drives is very competitive. The current market price for a computer hard drive is $42. Ortega would like a profit of $12 per drive. What target cost Ortega should set to accomplish this objective? Target cost $enter the target cost per hard drive in dollars per hard drive

Answer 1

Answer:

$30

Explanation:

$42- $12= $30

The target cost Ortega should set to accomplish this objective is $30

Answer 2

Answer:

Target cost = $30

Explanation:

Target cost is derived by subtracting a desired profit margin from a competitive selling price. It represents the cost at which a company must produce in order to achieve a desired profit

For Ortega Company, the target cost per hard drive can be determined as follows:

Target cost per unit = Competitive selling - Profit per unit

                                = 42- 12

                                = $30